>> this is market makers with erik schatzker and stephanie ruhle. >> russia at a crossroads, the murder of an anti-putin politician has many pointing their fingers right at the kremlin. >> republican rebels handed house speaker john boehner a humiliating defeat. can he get that homeland security bill passed? >> one billion viewers but no profits, we will see what google needs to do to make some more

money. it's a new week here on market makers. i am erik schatzker. >> i am stephanie ruhle. a new leak. it's so cold. >> there is some breaking news on the manufacturing sector this morning. scarlet fu is out of the newsroom with the headlines. >> the number here is a disappointing one. they were anticipating a decline . on prices paid, this is a measure of inflation. a change of 35 when economists have been looking for an increase. one gauge people look at is the employment some -- employment sub index. here we are looking at a decline in february 2 51.4 from 54.1.

we are also waiting for construction spending numbers. those numbers have just crossed. an unexpected decline of 1.1% when economists were looking for a slight increase of 3/10 of 1%. nevertheless, when you look at stocks indexes are at session highs. >> thank you for the latest. >> the top business stories of the morning. hewlett-packard is expanding its business. aruba makes wireless network infrastructure that is mostly used in hotels universities and shopping malls. if it is the biggest acquisition in several years. the company is preparing to

split itself. at one unit will be focusing on personal computers and printers. the medical device maker is buying that meteorologist portfolio. the price is $1.6 billion. they are still considering alternatives for an amf women's health unit. citigroup has officially one the battle. the largest warehouse club chain in the united states says the city will become the exclusive ashur of cosco's credit card program. there is a 16 year relationship.

in samsung is taking aim another run at trying 2-d thrown -- trying to the throne the iphone. they showed off the new edge models at the global conference in spain. the edge has a screen that extends to the left and right side of the phone. both phones have software that makes them compatible with all card readers. samsung is trying to reverse profit declines in market share losses to apple. and john boehner says it is not easy leading republicans. on friday he suffered a humiliating defeat. congress eventually averted a partial's -- partial shutdown of the agency by approving a

one-week bill. boehner was asked if he could still leave the house republicans. >> remember what is causing this. it is the president of the united states overreaching. >> boehner will try again this week to get homeland security funded through the rest of the fiscal year. conservatives are opposed to any spending bill that doesn't block president obama's executive orders on immigration. that is progress for you. and the longest-serving woman in the senate is officially calling it quits. democrat barbara mikulski will make the announcement later this morning. it is the top democrat on the power pole of the appropriations committee. >> tens of thousands of russians marched through the capital yesterday.

he was gunned down as he walked across the bridge to the kremlin. his murder marks the 11 high-profile killings since putin took office a few years ago. the question everyone is asking who is responsible? andrew did president putin order the hit? that is a question i can't help but ask. >> whether he ordered the hit let me put it this way he was the most visible opposition figure in russia. i think we can safely assume they are very closely surveilled wherever he goes. particularly where the murder took place, just outside of the

kremlin in a very public area. it is not -- it is hard not to reach the conclusion that the intelligence services allowed for his murder to happen. and then by token i think it would strain the imagination to think that a figure of such significance and magnitude, for that to happen that mr. putin was not aware that this was in the works. >> not aware. so you think he has no real connection. >> sorry, excuse me i was speaking into convoluted of the way. it is hard to believe that he would not have been aware of this. in other words, i think the decision to take him out would not have happened without the implicit approval from the

kremlin. >> who besides putin himself would have a motive? >> he was very outspoken in his views against russia's role in the war in ukraine. those russian nationalist groups that were very supportive of what the russians are doing to support the insurgents that is what i would do to take out mr. nimes soft. a second theory that has been posed is that he could have been taken out by islamic jihadists as he expressed sympathy with charlie hebdo.

the more important thing is whoever actually did the contract killing, they were allowed to do it. >> new matter -- no matter who pulled the trigger, someone affiliated with that individual would have to ask permission effectively from putin himself or people around him such that putin gave blessing. >> people around him. it is impossible to say for sure. my understanding on how the system works to make a decision for something quite significant, some would think whatever bureaucratic chain it is it would be very reluctant to do so unless they were and powered. is >> let's assume putin and his

posse are behind this. are there any ramifications whatsoever? >> there have been a number of political assassinations over the last couple of decades. that does create real limitations for what the outside world can to. i think it is quite frustrating. >> does this market change at all? is it a new dark era for russia that could be taken out or is it more of the same? >> it marks the end of an era and the beginning of and more

unpredictable era in russia with the war in ukraine. how it was done was a very explicit message that we can take you out. >> are we kidding ourselves when we think of vladimir putin gives a flying fig about sanctions imposed in russia. is this the way the guy roles? >> i have been skeptical for a long time. the sanctions are going to -- they primarily hurt that class of people which don't support

mr. putin in the first place. those that see their futures are more opened and integrated that is not mr. putin's core constituency. >> it is indeed a dark era in russia. >> one we return, time to get wired. we are going to head to barcelona in a giant mobile world congress. >> we're hearing stories about youtube millionaires.

>> these are the top business stories of the morning. hewlett-packard is making its biggest acquisition in years. it is going to be paying $2.7

billion. hp is getting ready to break into that market later this year. it may slow crawl -- slow global growth breath and stimulated. both japan and china appeared to be valuing their currencies. those moves make exports cheaper. he also says they are bound to hurt the global economy as a whole. the new ceo of mcdonald's will outline his plan -- his plans for turnaround litmus week. they'll speak this week to franchise owners and suppliers. the wall street journal says they may reveal changes to mcdonald's in gradients or announce plans to shift chicken or beef. >> for mobile world congress trade show we have already seen

new smartphones and wearables for some of the world's biggest mobile companies. here to give us an inside page -- inside peek to what is going on -- going down is brad stone. i'm going to need you to wish him a happy birthday. >> i will definitely do that. pretty much the biggest and noisiest collection of smartphone executives. greg, you have been to for mobile 100s, what is different this year? >> it seemed to get bigger. they somehow seem to fit more and more every year. i think it is all about lifestyle and it -- and experienced in how you fit this technology into people's lives, their cars, their shopping

experience? all the things we do day-to-day. it is a global digital events now. >> we have heard about payments. at samsung announced samsung today. what are the chances are for these other services to reach the same level of early success that apple and had? >> all the players now are extremely interested in launching their products to our consumers in a more convenient way. i think all of them have interesting opportunities. there will be a number of success stories. i think all of those players samsung was there. google with their purchase. all will provide platforms so

the cubbies have a great shot at building out solid plate -- solid payment products. >> over the long-term as each coming to payment, is there a chance they may this intermediate or substitute for the traditional financial institution? >> what is important to realize is the distribution is changing and this is how consumers will engage with your provider through mobile technology and different devices they carry around with them. it is critical we are in those products. we promote our brand and what we can offer. i think we have a strong brand and strong product. we are very excited about getting into this.

>> what you see is the payment opportunities? are their payment opportunities in the upcoming apple watch? . >> it is still a long way off. even if we take wearables as examples, we have a proven concept for a trading app. that is a long way off any sort of product launch. yes we are looking at them and engaging with those technologies. >> something about this trading app, a trader can manage their portfolio via their watch and what kind of activity do you currently see on mobile devices? >> about a year ago we launched trading applications on smart phones. we are now doing billions of dollars on trade every week.

as traders need to move around a want to keep track of their positions. we do start to see opportunity. this is something that is still a little ways off. >> you guys announced a plan with ibm for the, developing financial services. what is the next service online and mobile look like? >> we are clear we need to be an open back. we need to develop greater innovation and a number of court -- a number of corporate partners are with them. what we are doing around the world in the u.s.

we are now taking requests. and we're going to live -- try to launch a series of products. a >> is it too early to give me an example of one thing that surprised you so far from a developer? >> we would have thought many of the developers would focus on the technology. many of them would focus on branching experience. interesting observation. as opposed to a technology perspective. >> thank you very much as i swivel it around and send it back to eric and staff. >> when we come back it is a crucial week for the affordable care act. the supreme court hears a case that may decide the fate of obamacare.

>> house speaker john boehner will try again to get his members back in line. >> also plenty of eyeballs but that pundit iphones but no profits. -- also plenty of iphones but no profits. >> they're asking you to pay. >> that will be google. . .

. .

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> i am erik schatzker. >> i am stephanie ruhle. these markets? >> keep your eyes peeled. it just happened. 5000.0 two we have not been here since march 10, 2000. it has been almost 15 years since we last saw the nasdaq at 5000. >> a lot better than it feels right now if you take yourself back to those times.

people were feeling it, getting paid, confident across the board. let's go to scarlet fu in the newsroom. break this down for us. our thousand, that is huge. >> it is huge. things are different from last time around. we are about a week shy of the 15-year anniversary. we are still 40 points away from that after breaching 5000 for the first time since march of 2000. you see the chart over the last 15 years. a big slide down. it was quick. and the long slog back up. what is interesting is how the nasdaq has outperformed the s&p and down with gains of about 5.5%, more than double than we've seen on the dow and s&p during the same time. i was looking at the other constituents. the numbers are staggering. apple this year, up almost 18%.

it has a market cap of $757 billion. the biggest company in the world, amazon, also the constituent with a market cap of $170 billion, up 24%. starbucks also around in 2000, up 15% with a $71 billion market cap. if you look at how the nasdaq has done since the low in october of 2002 below for the nasdaq after it breached the 5000 level, this is also staggering. 13,000% increase for apple since the october 2002 low. amazon, 2100%. starbucks up 780%. the reason we do not include google is because google was not a company that time. it was not even around in 2000. if you look at the top weightings in 2000 versus now it is notable. microsoft was the number one

weighted stock followed by cisco and intel. these are old tech companies. microsoft still up the overshadowed by apple and google making its entrance as well because it was not around in 2000. one final note i wanted to make was it took a lot longer this time to get from 4000 to 5000. at first glance, it would appear it took 461 days or 313 trading days to get from 4000 to 5000 this time. last time, it took 71 actual days and 49 trading days. that was a very rapid rise up. this time, it seems orderly in comparison. >> my mind is sort of blown by this. google, which was not around them. >> apples market cap finished the first quarter of 2000 and

$22 billion -- at 22 22 billion dollars. >> you have to look at valuations. valuations today based on numbers or enthusiasm? >> that is what people would argue is different this time. you have companies that actually have profits. in 2000, we were not talking about price or earnings rations. we were talking price to estimated earnings or sales. they had ridiculous metrics because they could not measure earnings for most of the nasdaq companies. some of the big companies like microsoft and starbucks, we did. but there were plenty of other companies that were not making money. >> we laugh at hats.com 10 years later. 10 years from now, are we going to be laughing at airbnb? >> these are the companies that

have not made it to the public market yet. that is one of the reasons why companies listed are doing better because they are careful about what their financials look like before they list. >> very good point. companies that list publicly now are more mature. >> not always. >> thank you. >> moving from new york to the d.c. tomorrow, benjamin makes his controversial address to congress. he will one lawmakers about the iranian nuclear threat and urge them to do what they can to delay any deal negotiated by the white house. wednesday, the supreme court hears a case that could bring down the entire affordable care act. and then of course, homeland security funding has been tied up. congress passed a one-week extension. that runs out again this friday. no progress, d.c. let's start with peter cook.

is there any reason to think speaker boehner will have more luck getting it passed this week? >> i think it will be a lot of instant replay this week. it was a rough friday for john boehner. you could be another very rough friday for john boehner. he has the problems and divisions in the house republican congress. his options are to do a short-term bill or finally acknowledge reality, throw in the towel, and pass a full funding bill for the department, security that does not touch executive actions. he is likely to anger conservative critics in the conference again and raise questions about whether he can hold the group together for bigger fights to come. the debt ceiling, the budget, even highway spending at the end of may. >> peter, it is hard for people outside washington to appreciate just how tense things got on

friday. even if this does not come to a head later this week what does that say about boehner's staying power as we head towards other showdowns? >> here is the reality. to unseat john boehner would be a complicated and difficult process. there is no one stepping up to challenge him. but it is not out of the realm of possibility. there were private discussions last week about that thing. there were supporters of john boehner talking about how they could defend him. the fact they are even having the conversation should tell you something about john boehner's standing. 25 house republicans did not support him for speaker in january. on friday, 52 house republicans stood in the way. that means the just say no caucus has doubled. >> is this about john boehner about the republican party, which cannot get out of its own way? >> it is about both.

it is about divisions within the house republicans really striking. there were statements from supporters of john boehner calling the conservatives phony conservatives over the weekend. these are strong words from within the party. this is republican versus republican. it says a lot about john boehner. it says a lot about the divisions within the republican ranks. what it tells you is there's more to come, even with republicans in control of congress. hearding the cats is going to be just as difficult for john boehner. >> the republican -- democrats are going to laugh all the way to the bank. >> there is some gloating going on. they enjoyed the embarrassment of friday. there are democrats who feel sympathy for john boehner because they realize dealing with him would be easier than anyone who might be replace him. >> last year into something

republicans will be watching closely, the battle over obamacare at the supreme court. you have been following this closely. set the stage. >> we have got arguments coming up in a case on wednesday. it is decided against the government, it would gut obamacare in most of the country, at least 34 states would think. >> remind everybody who has not been following it as closely as you have, this comes down to language in the legislation and whether or not the supreme court chooses to follow the language exclusively or to interpret the language and intent in the bill. >> that is right. there are about four words in the law that seem to indicate subsidies to help people pay for premiums should only be available in states that have created their own health insurance exchanges his online marketplaces where people can

buy coverage now. only 16 states plus the district of columbia have created their own exchange. the rest of the country rely on the federal health care system. if this case is decided against the government subsidies would no longer be available through the government system. that covers about 7.5 million people that would lose insurance subsidies. >> is there a backup plan>>? >> you have republicans and paul ryan a couple of days ago saying they are prepared to step in with a replacement plan. but they might continue some of those subsidies for a brief time. they want to undo the health care law. they see this is perhaps the best opportunity to do that and try and circus alternatives they would like to pursue to replace the health care law. this is going to be a challenge for republicans. even if they win, they will have to execute on that. it is not clear they are ready for prime town -- prime time

ready to the lands on the table and get them approved in congress. >> there is a lot of speculation about what the supreme court might do. familiarize us with what people are saying. >> the question is how he votes are there. it is simply a headcount. last time the health care law was at the supreme court, john roberts cast a controversial vote that kept the law intact. now the question is, is he the swing vote this time? will you stick to the position he took -- will he stick to the position he took a few years ago? could he be the deciding vote for or against? will he say this long remains intact? it is a guessing game. a lot of lawyers opining as to what the supreme court might do. >> i'm going to equate this week in d.c. to one giant root canal. thank you, peter cook and alex wayne. >> coming up, the battle for

advertising dollars. youtube has the star power. what about the money? ♪

>> welcome back to "market makers." i am stephanie ruhle with air schatzker --erik schatzker. the nasdaq has not seen a day like this in 15 years. the nasdaq composite index hit 5000 for the first time since march of 2000. it is now more than 1% below the peak it hit during the dot com boom. the nasdaq is on track to rise for a night street quarter -- ninth straight quarter. posco has decided to go with visa as its official credit card. citigroup will become the issuer of costco's charge cards. the move takes effect next year.

costco is the largest club chain in the united states. these are the phones that samsung hopes will take is this away from apple. samsung showed off the phones at the mobile world congress in barcelona. the edge of the screen that wraps around the right and left sides of the phone. samsung is trying to reverse profit declines and market share losses to apple. >> you to has the viewers -- youtube has more than one billion viewers a month. according to "the wall street journal" it has not made money since google bought it in 2006. how is this possible? let's put this question to the senior analyst from portland oregon. people talk about youtube is a jewel in google's crown. perhaps it is more like cubic zirconia than a diamond? what is the story? >> the revenue numbers do not

tell the whole story around you to. -- youtube. it is arguably the second most important search engine. it is a strategic buffer that helps prevent anyone from taking meaningful market share for search. >> how is it that youtube is not mcnally --does not make money? >> they do not charge consumers to use it. very little of what they have available is palatable to most advertisers. there is relatively this little video they deliver that is monetizing able. >> what about the fact that so many people use it as a search engine. is there no strategy? >> i don't know if they don't have a strategy. it is clear they want to find ways to get content of a sufficiently high quality that

they can sell advertising against and keep the content costs low and drive revenue up. >> where is google spending all this money? they have written it -- they have revenue. for there to be no money on the bottom line, clearly some costs come into the equation somewhere . >> when you think about 5% or 10% of ads -- content being monetized, the problem is you have 90% of videos being delivered around the world, which is really expensive, when you think about the cost of the data centers, the cost of streaming. all sorts of other administrative costs. they built a good consumer product. that is not free. there are a lot of places they have cost. there is no revenue to offset that. >> why is it that expensive? i get your point that they are doing a lousy job of monetizing ads. >> i did not say they are doing

a lousy job. i dissent there is no money in monetizing. >> they are not monetizing much of their video content. is it that expensive to run a bunch of servers to store all this video content and make it available as it is at the press of a button? >> it really is. if you have to operate the data center as they have, you have to pay the content delivery costs. it does affect add up to a substantial sum. >> what does it say about google? the prevailing view is google go youtube for a song at $1 billion. how do you value it today? >> youtube is a small part of the overall google store. i have been arguing investors probably put too much stock in youtube as important component of google.

it is not from a financial perspective. it is from a strategic aspect. it is a buffer. would you rather microsoft bought youtube? that would have armed bing in a meaningful way. it is the second most important search engine. better they control it and someone else. >> from a defensive standpoint, google would rather have youtube than let an enemy have it. >> you can argue they have been rational about their approach so far. why not try to monetize the content that is free? like pay for people to produce content if you think you can monetize stuff that does it for free? why spend $1 billion with the nfl to put a content where he would never make the money back in advertising? >> i would tend to agree with you. thank you for being with us this morning. talking about youtube and how

this many years later, it still does not make money for google. >> it might not have to. do when we return, it is the one thing a corporate p.r. department never likes to hear. "60 minutes" wants to do a story. that is what just happened to lumber liquidators. ♪

>> welcome back to "market makers." i am stephanie ruhle. shares of lumber liquidators holdings, the day after he story on "60 minutes." it reported the laminate flooring made in china contains high levels of formaldehyde, a cancer-causing substance. the report used hidden cameras to show factory managers admitting to it because it was cheaper. take a look. >> it is compliant with california law. listen to what the general manager told us.

>> [indiscernible] >> that is the same thing the undercover team was told that all three mills they visited. >> all this is carb 32? >> if you could not hear that, i hope you can read it. i don't know how you could not. take a look at the stock. got to bring in scarlet fu. what is lumber liquidators doing today? >> is a delay in the opening of trading. we do know it is expected to be a big loser wants trading does begin because in the premarket, lebron -- lumber liquidators holdings under $39. as a good indication, off 25%. 38.91 was the latest price. "60 minutes" ran the story last

night that showed a sold illegal flooring. they replied saying they comply with applicable regulations. and make the point the attacks are driven by shortselling investors. if you look at the short interest in the company, 33% of shares available for trading up from 11% in july. the bears have got more active when it comes to lumber liquidators of late. stock has tumbled quite a bit. last week, down 24%. going from $60 to almost $52 after the c.e.o. indicated an upcoming story would put the company in an unfavorable light. david strasser says this could hurt sales momentum. it is already reflected, he says, in the opening price of about $40. >> thanks very much. "market makers" will be back in a couple of minutes.

we will talk about sotheby's, it keeps getting hit from all sides. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> they are partying like we are back in the boom. the nasdaq breaks 5000 for the first time in 15 years. are tech valuations getting too high? >> commercial real estate in manhattan. >> he blew the whistle on one of the world's biggest banks. we have a story about arms dealers and claims of tax evasion. welcome to "market makers." i am stephanie ruhle. >> i am erik schatzker. it is 11:00.

let's ring in the hour with a bulletin. >> is a lot to happen in the next hour. you have got to watch. >> let's talk about the top business stories. the nasdaq has not seen a little like this since the days of the.com boom -- dot com boom. the composite reached 5000 points before backing off to 49 96 where it is now. it is up almost 6% this year. a little more than one percent point off the all-time high of 5048. the nasdaq has been helped by the 17% gain year to date in shares of apple. the biggest acquisition for hewlett-packard in several years, h.p. has agreed to buy aruba networks. the price is $2.7 billion cash to the c.e.o. has been focusing on cutting costs and returning

her company to growth. later this year, h.p. will be splitting into two businesses, one for corporate services and the other for printers and personal computers. there are two takeovers today in the medical care business. boston scientific is expanding its men's health business. the medical device makers find the american medical systems' portfolio for 1.6 going dollars. boston scientific is going to get prostate treatments. cardinal health is fine johnson & johnson's business for almost $2 billion. it makes cardiology and intravascular devices. shares hit a record high last week. bill gross says we are in the middle of a global currency war. instead of stimulating growth this will make it slow down. he says interest rates are below zero in europe and china and japan appear to be devaluing their currencies as well. he says those moves make experts cheaper and debt burdens more tolerable. but at the same time, those

policies are bound to hurt the global economy as a whole. in moscow, thousands walked to honor a murdered opponent of vladimir putin. boris nemtsov was shot and killed near the kremlin friday night. he had been planning a rally to denounce putin for the war in ukraine. he was interviewed hours before he was murdered. >> the most important cause of the crisis is putin started an aggressive policy of war against ukraine. this was debbie for our country and many citizens. -- this was deadly for our country in many citizens. >> pu says het will take charge of the murder investigation personallyin. >> more on the big nasdaq milestone hitting 5000 for the first time in 15 years. it is 1% below its tech boom highs. julian, break down large 2000

versus today. how are these markets different? what they could not be more different. essentially in march of 2000 you had a large sense of frothing this -- frothing us -- frothiness. we don't see anything along those lines concretely in 2015. valuations are more in line for the broader market 22 times forward in 2000 versus a more reasonable 17 times here. while there is no question share ownership is something we do see across the u.s., there is nowhere near the sense of unbridled enthusiasm that marked the top in 2000. >> the nasdaq is not the

broader market. it is trading at 32 times earnings roughly speaking. is that the right valuation for tech stocks today? >> you have to differentiate between types of tech stocks. what we have been saying all along is there are a swath that have been throwing off unprecedented amounts of cash, a lot of which is held overseas which we think looking forward particularly in the low interest rate environment are going to help buoy valuations across the sector. >> how so? >> you are going to see continued m&a, something very strong in 2014. you are also going to see the potential for an spurred by activism the potential for shareholder returns, whether in the form of buyback or in the form of special dividends which is going to increase leverage on

balance sheets something that may sound counterintuitive. leverage on the corporate level is quite low. >> when we look at these companies and valuations, does it give you pause? do you think things are more responsible than they were compared to 2000? >> that are parts of the market that are sporting high valuations. no question about that. we think that is a feature you will see in literally every bull market. but when you look in general and across the entire spectrum, we do think there is room for valuations to climb. i would say technology as a whole, despite the fact there has been doubt around earnings technology as a whole has shown good earnings and revenue momentum the past few quarters.

>> thank you so much for joining us. a busy day in the markets. julian emanuel from ubs securities. >> speaking about violations let's talk about the company that may find itself on the nasdaq. airbnb raising another $1 billion from investors with a valuation of about $20 billion. it is eye-popping, but so is the valuation on uber. we are asking ourselves, what is behind the valuations on these private companies and which might be the first to find itself on the public market? cory johnson has some ideas. he is with us from san francisco. what do you say this morning besides good morning? >> i see them selling 5% stakes across the board. late round valuations are giving

them big numbers. investors are just as interesting. it is not venture capitalists. these are late deals in the capital structure of the companies. they tend to be firms like fidelity mezzanine type investors who might want to participate in a modeling as opposed to long-term strategic partners. >> given who these investors are and what they typically do which is invest in public markets, is that to say that uber, snapchat, interests, and airbnb would be trading at the same valuations on the public market? >> no. shall i elaborate? one thing we don't know which is kind of important are the terms of the deals. to what degree are these deals resettable? if the next round of investment is lower, to the deals maintain 5%? makeup an example.

fidelity bought 5% of uber. if the next round is lesser, do they keep 5%? this pocket does that come out of? a lot of these deals are written in such a way where the risk is different than the risk of the public market acquisition of shares in a publicly traded company. we don't know the important part of this. that is kind of typical of deals at this stage of a company. >> it is clearly a seller's market. there is no way one would think uber could fetch a valuation of $40 billion if it were not. to what degree do we know, do the buyers in this case have access to detailed information about these corporate financials? >> that is a great point. i have been meeting people around silicon valley asking that question. no one wants to jump up and say

there are dumb investors. what i have heard more than once is the due diligence falls on the shoulders of the lead investor in a round. a lot of other investors are just hoping that person has done their homework. typically, though situation stop always work out well. >> wait. who is hoping who does their homework? >> the lead investor on a given round is usually the one doing a lot of the work. the other investors are not getting the full examination of the books they might otherwise, which sounds super sketch to me. >> when you get that description it almost sounds like the madoff explanation. he said someone told me it was a great idea and someone told him it was a great idea who told her it was a great idea. >> for the last suggestion we don't have the exuberance the dot com boom your ahead, there

is a plunkett --the dot com boom era they bought shares of juniper networks. i remember sitting in a presentation in 2000 where juniper networks was presenting and the stock was trading at five times what they said the entire market opportunity was. people felt they had to on the stocks or they were missing out. there is some of that going on with private valuations where they do not want to miss out on these companies if they become the next big thing. there are some transformative businesses. uber is right there and airbnb is right there. anyone in the hotel business was the biggest change -- will say the biggest change in the industry is the inventory coming online. 10,000 rooms a month are coming online from airbnb which is changing the industry. these are businesses probably profitable. they are certainly transforming the industry and growing those

industries in ways they have not grown. they are not just created share. they are creating bigger markets. >> thank you, cory johnson. >> when we return just what sotheby's did not need. another activist investor launching a campaign. >> he is a thief to others. he will meet the man -- he is a hero to some and a thief to others. you will meet the man who blew the whistle on the world's biggest bank. ♪

>> lumber liquidators has begun trading. it was delayed as the company released a statement following the story that accused it of selling illegal flooring. the stock is down 24% trading below $39 a share now at $38.34. lots of volume. it already tumbled 26% last week after the c.e.o. said the story would put the company in an unfavorable light. the company has released a statement on the story on "60

minutes," satan we believe they used an improper test method in reporting that is not included in the california regulations. they go on to talk about how they became aware of the content of the story and reached out to their chinese suppliers in the story. these suppliers have confirmed all products provided to lumber liquidators are compliant. they could not verify the identity of the individuals appearing in the videos. they going to say our products are safe and our testing is thorough. noted as well the declines in the stock rise and these verbal attacks have been driven by shortselling investors working together to drive the share price lower, making money through shorting the stock. as we look at the share price in early trading, lumber liquidators just began trading about two minutes ago. it is off by 1/4 of its market value. >> the picture of sotheby's is

not looking good. the reported today profits fell over 18% in the fourth quarter. it has activist investors to deal with. oliver is an analyst covering sotheby's accounting company -- at cowan and company. there was a bitter proxy fight last year. the c.e.o. is stepping down. he has not yet. chairs -- shares were down 18%. is it too soon? >> they did estimates based on higher-than-expected expenses as well as the commission margin being right. this company is in transition. there is a c.e.o. search underway. we do have a $45 price target. i would say the industry remains very competitive for high value

auction lots. we think they could afford to get back about $209 based on our estimates. there is a big debate. 500 is the number publicly asked for. based on how we look at working capital and liquidity in the covenants, that is how we are coming out. we understand the company right now is waiting for new leadership in terms of having the flexibility ahead of this. >> how much time do you need to give them? >> when he was criticizing the company and the way it operates is how like he has said they need a complete overhaul from the top to the bottom and the bottom to the top. how long should this take? >> today to get more visibility on the conference call. they outlined the expenses for next year as well as business earnings and sales and margins. that is the most visibility we have had in a long time. i do believe the c.f.o. is on the right track. >> he should not step down? >> i think it is subjective.

patrick is doing a great job with capital returns and analysis. the company is focused on what they define as the middle market. plots around $1 million to $50,000. that should be a great strategy for helping merchants. >> does that mean they are ceding the high end? >> they are both in transition. was great for sotheby's is the c.e.o. of christie's is know as well. there's a lot of flux happening. i believe this is positioning sotheby's for market gains in the middle market. >> is the middle market as profitable? >> it is more profitable. any loss we have heard of is at a lower margin because it is competitive. you want that excitement. you want the growth profit dollars. 14.7 this year, is a major focus for us. >> dan loeb has had his say.

nick mcguire is having his. what is wrong with this company? >> we are looking at the fundamentals. i am looking at margins trying to understand if they are going to stabilize, get better or worse. the selling season, the spring selling season, it is a seasonal business. i think about april-may. the global g.d.p. dick schaap -- picture has softened. for me, it is lack of catalysts and also monitoring the overall evolution of the business as they try to have financial and strategic levers to transform the business to be less dependent on the volatility of the auctions. >> do you agree? should he have gotten the boot? >> i think change is good for the business. what they are focused on now seems promising. this is a very unique specialized retailer. consumers change. their thinking about options --

auctions different ways. there are tons of opportunities. >> as an activist investor understand how to run this type of business from an operation standpoint? >> that is a good question. who really does? it is very special. there is not a p a pier group of publicly traded auction houses -- there is not a pier group of publicly traded auction houses. >> if you were download doing it all over again would you target sotheby's as an activist play? >> it is a high-margin business 6% free cash flow yield. operating margins are extraordinary, 29%. they have leverage they could take on the return of capital prospects. the brand is glamorous, jet set. average unit retail -- >> he would have? >> i think it is a neat place to

be, a great company. >> expenses are also extraordinary. dan would say they need to be slashed and dashed. would you agree? >> the company has done a good job of that past few years. their guidance increased marketing expenses which seems fair. i'm looking forward to what they are doing now. >> you are at $45, market hold. what would it take to make sotheby's a buy? >> g.d.p. growth, luxury, and monitoring>> the sales. we are in the marketplace. to talk to dealers and look at supply. if they get great private sales as well, so it is watching. >> thank you so much. oliver chen is a luxury analyst. >> "market makers" will return in two minutes. we hope you are with us. ♪

>> coming up, secrets of a whistleblower. you will hear from the man who claims there was widespread tax evasion involving one of the world's biggest banks. >> great news for land lords. rinse for commercial buildings are back in record territory -- rents for commercial buildings are back in record territory. ♪

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>> live from bloomberg headquarters in new york, this is " market makers" with erik schatzker and stephanie ruhle. stephanie: welcome to "market makers." markets overseas are closing for the day, let's go back to our chief markets correspondent, scarlet fu, for a recap of action overseas. scarlet: recent gains after the stoxx 600 number last week and the days before that cap making new seven and a half year highs, so you're seeing the stock 600 falling by the most in at least two weeks because of the ecb rate decision and mario draghi's

news conference. will the focus really be on the technicalities of qe and release -- reinstating the greek debt waiver so they could use their sovereign bank greek holdings as collateral. in the meantime, let's get some individual names -- vivendi saying it plans to return about $6.4 billion to investors, less than analysts anticipated. he also agreed to sell their stake in a company, vivendi accepting a 40 euro share bid. shareholders are pressuring a swiss cement company to renegotiate or reconsider a deal entirely -- that stock is down about 4%. this is all according to people familiar with the matter. right now, we are seeing consolidation before the ecb on thursday. erik: did hsbc passing senior

management know the bank was helping clients they'd taxes question mark the man who blew the lid off the scandal says he can prove it. he spoke exclusively this morning with francine lacqua who's with us from london. this is a fascinating story. what is it that he says he can prove? >> i spoke to him for 50 minutes and tried to get exactly from him how he knew this was true. we talk about hsbc and the swiss authorities and what really came out of the interview is that he said he can prove hsbc management new of these alleged tax abuses. >> i can prove and explain that the top management is aware and was aware of the problem that was faced by the private bank

generally. i'm really surprised at the top management of hsbc are not even trying to know what it is about -- they don't even try to get insights that they did not even get from their own way to receive information. >> we did try to get him to identify any bank executive but he declined to describe the evidence he had, only saying that none of the documents were signed by top management but he said the files provided logical proof stop what that means, i don't know, but it could be some kind of software that was bought or the software that was set up. erik: it is 2015. the stuff he says he took from hsbc, he did seven years ago, in 2008 post up >> it exactly.

it was actually at the end of 2007 and 2008. he went to the tax authorities and i got past to the u.k. and then on to u.s. authorities. what he says is the decisive point was that after there was little investigation done, he went to the committee for investigative journalism based out of washington dc. they poured through the data and divulge this about five weeks ago, which is why it's a big deal in the u.k. during an election year. stephanie: and hsbc? >> they a sickly declined to comment. they referred us back to the statement they gave five or six weeks ago at the time. they said everything at the swiss private bank has changed and the ceo -- this was four or five weeks ago when the story first broke, he took a full-page newspaper out saying he

apologize for any wrongdoing and said that the unit has been completely overhauled. erik: it's a big story in the london, u.k. and switzerland as well where these tax violations were alleged to have been committed. describe the kind of pressure hsbc is under right now. >> hsbc is under a lot of pressure. when you talk to analysts and insiders, there's a lot of pressure for this bank to possibly be broken up. we were hearing the ceo last week being grilled by parliamentarians of lawmakers in the u.k. not only about what he knew but why he did not have oversight. when you look at the sheer size of hsbc it points to some analysts saying if he did not have oversight, then it's just too big a bank and maybe they need to be thinking about splitting it up to make it more sizable to keep a check on things. >> where have i heard that

before? >> never heard that argument before. erik: he declined to describe the nature of his evidence. in fact, he was quite vague. are there any reasons for us to doubt what he is saying and the claims he is making? >> that is a very good point because he is a controversial figure. some even accused him seven or eight years ago for -- of stealing the data for money. he denies this and what he has leaked so far has been investigated so it gives you the impression something has been going on just in terms of the data that he has stopped that data is being poured over. he also intimated that he had more data. he remains the egg and saying what he wants is more dialogue and more transparency and almost intimated that if he did not get that dialogue, he may leak more information. >> my latin teacher used to

point at the bottle of scotch on the shelf and say don't be vague, ask for hague. great exclusive. stephanie: what does that even mean? erik: it was a brand of scotch. it's been on my brain. stephanie: on a monday morning. coming up, real estate rebound, office rates here in manhattan are back in the stratosphere again. we are going to find out why. ♪

stephanie: welcome back. you're looking to lease commercial space in manhattan gary to pay up. prices are back to their peak the highest in the nation. i guess is a leading commercial real estate broker who heads the cb re: new york group region.

that makes her responsible for more than 90 million square feet of commercial transactions. welcome. 2014 was clearly a banner year. does it feel frothy or is it only going higher? >> i think part of the market feel like we are at a peak. i think retail rents are extraordinary and i think we will see pushback from the retailers on that. i don't think cap rates can go much lower than they have gone but i think there's room to run for the office rent. and another things that feel top be is land prices, but i think there is room to run. erik: why is there room to run on office leases? >> companies were very reluctant in this time after 2008 to make commitments. erik: two new space or more space? >> both.

the financial sector has always been the big driver in new york and has been largely on the sidelines during this whole run-up. as a result of that, there has been this pullback. the year it tipped over was last year. 39 million square feet of leases done in manhattan. erik: if it's not the banks -- i remember when there was talk that jpmorgan was going to demolish the pen hotel and build a fancy new tower with gigantic trading floors. nobody's saying that any longer. if it's not thanks driving this demand, who is it? >> financial services is still about 40% of that but it's all been small and medium-size financial service firms growing. people who left major banks people who started their asset management operation were watching -- 280 park is being entirely filled up by people who

are what i would describe as peak financial services firm moving in to double the size space location they were in. then there is the technology advertising, media and information accounted for about 23%. when you think of the small base it was coming off the crazy thing is we did a slew of leases last year in manhattan of 100,000 square feet or greater of companies that either didn't exist or no one had really thought about twitter in the year 2000, but they are taking huge amounts of space here in new york. >> how about international investment? in cities like new york and miami, one reason prices have gone up and up our international buyers. are they playing in this game? >> they are indeed but that we are seeing for the sake of

discussion in new york in a significant way, their moves are typical of what we are seeing and we are seeing this from chinese buyers as well. they are buying 49% interest with a local operator controlling the asset and that is how they are coming in. stephanie: what happens in our big moves? when conde nast moves what happens to times square? >> now is brookfield place. what happens is big blocks of space become available. times square is one of the challenges of the leasing cycle because it has been a victim of its own success will stop have you been in times square recently?

the bike lanes, the plazas -- now it has some of the new office product in the city and that will ultimately play out fine, but right now, the dynamic of the street life, it is crazy. 55 million, 56 million tourists all comes to time -- all come to times square. and the companies there -- it's going to be a challenge, but ultimately, the product itself is good enough. >> what is the hottest neighborhood it for commercial products in the city? >> every company says i want to be in an industrial building that was an old printing holding. those are not major buildings and they are full right now. stephanie: i could offer my office -- my apartment in tribeca. >> tribeca is the most valuable residential real estate in the city right now. one of the reasons downtown

office spaces have such a big pickup in value is because some any executives are moving into tribeca and they love to walk to work. it used to be the east side or park avenue, now they are living in your neighborhood. >> hudson yards -- how valuable? >> it's hard to know -- first of all, what do you mean by hudson yards? steve ross, forgive me, but a number of people own hudson yards. stephanie: i always think steve ross owns the old thing. >> not even close. in fact, they are the dominant player and what they are building is the nucleus of hudson yards but all around them are other developers and other major owners -- brookfield is a perfect example, they own substantial pieces. erik: how important a commercial market is brooklyn? stephanie: we complemented my

neighborhood and now he wants to pump up his own. erik: i ask an open-ended question. >> i've had an agent in brooklyn for a long time and bruce ratner pioneered that area. his buildings are largely full now. then a family developed dumbo and those buildings are full. now we have a new generation coming in with dumbo heights. our firm put etsy in its space and they took over 200,000 square feet. it is going to span out from there. we're going to see greenpoint and all kinds of areas we never thought about, but it will take time. it's also going to be a case where right now, the rents are high in brooklyn. if you want to go to dumbo heights, you are talking about rents north of $50 -- $50 a foot.

value is a very different thing in manhattan right now. stephanie: thank you for joining us. she's that cbo of -- ceo of cb re: here in new york. erik: we will be back in just a couple of short minutes. ♪

stephanie: before we wrap up the show we got to look at this market. the nasdaq hit 5000 and is now flirting with it. it's interesting: we talked to julie and emanuel from ubs, are we really back to 2000, he is bold up bigger than i have heard before. >> is partly because of valuations. back at its previous peak in march of 2000, when it hit 5048, it was trading at 65 times

earnings, so it was valued at twice what it is today. on a relative aces, it is not the same market as it was then. stephanie: things just seem to be en fuego. i did not realize we were hitting 5000. as far as confidence in the market, do you believe investors are as confident in the market today as they were in 2000? erik: that's a hard question to answer. i don't know. i would say this -- the broad stock market, if you measure by the s&p 500 or the russell came back faster than the nasdaq did. they have had more confidence in non-tech stocks, maybe. >> what would it look like if there was no apple? it would look a whole lot different. erik: apple is up 17% year to

date. stephanie: that is it for "market makers. i'm going to say the great start to the week. erik: tomorrow, coverage of benjamin yet -- benjamin netanyahu's speech to congress. stay with us. ♪

exit is 56 mets past the hour that means bloomberg is on the markets.

a record-setting day on wall street, with the dow making a new high, the s&p 500 trading above its all time best and the nasdaq topping 5000 for the first time since march of 2000. the major indexes putting their best one day gains up in more than week. joining me for the options inside is the derivatives strategist at an km holdings. i want to talk about the nasdaq. last time we talked 5000 in march of 2000, we got there and the following day, we set a record high. now that we have topped 5000 know what? >> does that mean we roll over again? valuation almost doubled from that point forward and the s&p 500 is similar. in 1997, we saw a similar multiple on forward earnings and it doubled with a peak in 2000. valuation at this point becomes

psychological and tough to pin an investment opinion on that level. >> do options activities pickup when you reach a new milestone? >> no doubt there has been a lot of activity chasing that level. scarlet: we were talking about how january was all about volatility and then february was about unwinding the volatility. what is march going to be about? >> i think march will be relatively quiet. we have this elevated state of equity and cross asset volatility since december. it wasn't until february 11 that spot vix got back under 15 and that was may be a sign that this was unwinding. europe plus equivalent of the volatility index has been up and they're still volatility across asset classes. it's still pretty elevated, but

off of recent highs. for u.s. equities, now it's about how long this suppressed volatility continues and where the floor is for spot vix. scarlet: what do you think it is? >> is it 1012 or 14 15? we are waiting for the market to tell us. scarlet: let's get your trade on tivo. shares have fallen about 16%, so what is your strategy? >> it's a forgotten name. much more activity in prior years. this is about value in catalyst, not so much earnings. we want to go all the way out to august and sell a 10 strike put an by the 13 strike call. you can pocket $.15 doing that. the company is nine dollars, almost $10 in cash and payments

less quarter. a lot of value there and it's going to be all about carrier wind going forward. the downside risk is mitigated and you set yourself up for a nice catalyst going forward. scarlet: thank you so much. we've got much more coverage on the markets on bloomberg television, and the meantime "money clip" is up next. ♪

pimm: welcome to "money clip" we tie together the best stories and videos in business news. i'm pimm fox. here's the rundown around the world -- murder in moscow -- the murder of a prominent opposition leader gets thousands of people into the streets. the kremlin says vladimir putin is personally investigating. in tech, google takes on the world -- they give internet service mobile phone service, you name it, it's got it all. and in politics, forget the white house.